The Blog

How Does Medical and Insurance Billing Work

How Does Medical and
Insurance Billing Work?

It is difficult to talk about healthcare in the
United States without also talking about the costliness of it. For insurance
companies and medical providers the tension always lies in receiving fair
compensation, while for patients the difficulty is in receiving the best
possible care, without going bankrupt.

Indeed, the commentary surrounding the nation’s
healthcare is nearly always negative in some way, and unfortunately there is
some validity behind it. As Kathryn Watson wrote for CBS News “Health care
costs were outpacing the general rate of inflation long before the ACA or
Obamacare became law, and are projected to continue to do so.”

The reality is that it is a complex system, in
which healthcare providers themselves often aren’t in total control of the price
for the services they provide. At the core of the process lies medical billing
wherein the financial aspect is not set in stone, but rather is determined by a
wide array of components.

The Medical Billing Process

At the heart of the complexity connected to the
medical billing process lies the fact that each insurance company, each
procedure, and each provider is going to impact the process and the financial
result.

Thus, it’s crucial that industry professionals
are utilizing best medical billing practices, which ensure
that they are not only operating efficiently, but also effectively. For the
provider, this means taking advantage of those who know what they’re doing and
are invested in quality work.

There are several general things that can alter
how the billing process takes place.

Single Provider

Single provider medical billing typically refers
to those coming out of a doctor’s office. While it is common to believe that
doctors are solely responsible for the cost of treatment, the reality is that a
doctor usually does not know how much they will be reimbursed when they first
see a patient.

This is largely because generally, insurance
companies use their own proprietary algorithms to determine payments. This can
make costs and reimbursements extremely opaque and complex for both patients
and providers.

In most doctor’s offices, a medical billing
specialist is primarily responsible for the medical billing process in that
office. Billing specialists are responsible for following the financial aspect
of the operation from start to finish.

Medical Billing Specialists responsibilities
include the following:

●
Overview the procedures and
correlating charges

●
Distinguish the appropriate codes
in which to bill the payer

●
Enter claims into billing software

●
Follow-through when claims are
unpaid or paid incorrectly

●
Maintain relevance in the field

Given their large oversight of the process, a
different medical billing specialist can mean different financial results for
providers and patients alike. The thing that remains consistent is that their
assertiveness and expertise are invaluable pieces of the puzzle.

Multiple Providers

When claims for a single patient are being filed
from multiple providers or departments, such as those coming out of a hospital
stay, the complexity increases. For obvious reasons, the issues that occur when
one provider is participating are multiplied.

When multiple providers are involved an insurance
company is dealing with many, interconnected services. Not only does this
complicate the billing process, but it also means that filing and translating
the associated claims are more complicated for providers and patients.

Why Hospitals are Automating
Billing

For many providers, the billing and receivables
workforce is costly and can be responsible for incorrect coding and billing,
and thus for delayed revenue. At its core, the medical industry’s shift to automated
billing revolves around the desire to minimize errors, time, and money.

As we’ve noted before “All too often,
insurance companies find ways to avoid or delay payment for legitimate medical
claims.” Pursuing the latest in technology is one way to ensure that insurance
companies seeking to undermine providers have no feet to stand on.

When technology is utilized it makes it more
difficult to blame issues on a lack of clear communication.

Billing Health Insurance

Insurance companies are notorious for delaying
the claims process or processing them incorrectly. Ensuring that both providers
and patients receive what they should be goes back largely to knowing how the
process works, so when it isn't happening correctly no one is blind-sided.

Health insurance companies have historically
failed to be upfront. Whether through tricky practices wherein they claim not
to be responsible, or because of something more straight forward like an unmet
deductibles, denied claims are simply a part of the system; understanding how
they work is an important way of ensure that the complications to the process
are few and far between.

How Health Insurance Claims are
Processed and Paid

The medical billing process is a matter that
should be straightforward: a provider utilizes standardized medical coding to
inform the payer of the services rendered, and that payer, usually the
insurance company, and the patient are responsible for paying their portions.
However, the reality is that those costs are virtually never set in stone.

While software is commonly used by the entity
processing the claim, there is not a universal software that those paying
claims utilize. However, those responsible for medical billing do operate under standards set by HIPAA
Transactions and Code Set Rule (TCS).

According to Sammy Mack for NPR, “The listed
charges are almost fiction. Instead, each insurer
negotiates for lower prices with each hospital and doctor on every plan. The
negotiated prices even can vary within an insurance company depending on which
plan a patient has.”

Thus, ensuring that medical billing is fair, is a
truly difficult feat even for the most experienced within the industry.

Explanation of Benefits (EOB)

Explanation of benefits is a document submitted
by most insurance companies, which explains to individuals what treatments and
procedures were paid on their behalf by the insurance company. EOBs are
typically physically connected to a check or a statement that also verifies the
payment that has been made by the insurance company.

EOBs are important, because in many cases they
are what dictate whether or not a claim was approved. If a patient is not
familiar with the language of medical billing statements, or there is coverage
that falls under a gray area, it becomes dangerously easy for a lack of
transparency and accountability to develop.

What Happens When Medical Bills Aren’t Paid

The unfortunate reality is that the entire system
is complicated by the fact that healthcare can potentially be a highly
lucrative field. Thus, there is much incentive for insurance companies not to
approve claims and for the patient to do all they can to avoid being
overwhelmed by the financial burden.

When Insurance Doesn’t Pay

An important component is ensuring that all
involved are able to recognize what should be happening, so they can determine
when it’s not happening. For providers this means having the expertise needed
to navigate both the billing process as well as how insurance companies respond
to claims.

For patients this means that they are prepared to
understand their EOB and what rights they have to negotiate and to challenge
bills determined by their insurance company.

When insurance companies don’t pay, the vitality of an organization is
at risk. Past-due receivable services can be vital for
the health of a provider and to, “expedite cash flow and maintain good
financial health.”

Even the most experienced of providers would do
well to utilize professional, experienced legal help to ensure that insurance
companies pay the portion of claims they are responsible for.

When Patients Don’t Pay

There are a wide host of reasons that may inhibit
patients paying the portion of bills they are responsible for. While this
typically represents a much smaller financial portion than what is unpaid by
insurance companies, it can become a serious roadblock to maintaining revenue
streams.

When patients do not pay, medical providers
invested in revenue recovery will utilize experts in collections. On their own,
a provider is largely limited to repeated reminders via mail and phone.

However, a collections agency such as The Patriot
Group will utilize every possible avenue not only to make sure that patients
understand their financial responsibility, but also to make sure providers are
protected in the future.

In the pursuit of patient collections “The Patriot
Group searches through extensive data to identify those accounts that are least
likely to pay, resulting in higher recoveries through various solutions
including skip tracing, bankruptcy reviews, insurance identification and
verification, credit bureau reporting and various legal options.

Making Accounts Accessible

The way forward is via transparency and
accessibility. One of the surest ways to ensure that both patients and
providers are able to trust the portions of the medical billing process that
lie outside their hands is by introducing and maintaining transparency.

Accessible
accounts: Patients and clinics should be able to view,
pay, and manage accounts in formats that are intuitive and user-friendly.

Clear
coverage: When a claim is submitted the correlating
coverage should not be a gray area. Instead, the language used should clearly
communicate the coverage offered so that when claims are denied it’s not for
subjective reasons.

Making the system more standardized, more
transparent, and more accessible to all parties won’t fix every problem within
the industry; It won’t create a perfect platform for fair negotiations or cost
reductions for all, but it will contribute to a culture that is better prepared
to accommodate those things.

‍

In the meantime, it’s crucial for those
participating in every step of the medical billing process to understand what
their rights and their responsibilities are, so that the system as it is can
operate as fluidly as possible.

...

Related RESOURCES

How To Protect Your Out-of-Network Practice from Insurer Audits

Remain compliant by using a list of patient forms and disclosures that're essential to your appeals and fraud audit defense.